The amount of estimated tax you need to pay will depend on your estimated taxable income for the year. You may be able to use the tax return you filed last year as a starting point. You can them make the necessary changes to the figures, based on changes in your personal situation and income for the current year, as well as changes in the tax law. Some of the aspects you should consider include:
Any change in your filing status
Changes in your number of dependents
Changes in the level of your income as compared to last year
New sources of income
Deductions and credits you may be able to take this year
IRS Publication 505 and Form 1040-ES
Some amounts in the tax law generally change each year, such as the amount for personal exemptions and dependents, and the standard deduction. IRS Publication 505, Tax Withholding and Estimated Tax, includes a section on important changes to be noted each year. These are also included in the package for Form 1040-ES, Estimated Tax for Individuals. Both of these publications also include a worksheet to help go through the calculation to estimate your current year taxable income, and current year tax rate schedule to determine the resulting tax. Form 1040-ES and Publication 505 are available on the IRS website.
Adjusted Gross Income
The worksheet starts with your expected adjusted gross income for this year. For purposes of this worksheet, you should include all your taxable income in this amount, including income that is subject to withholding tax. This is necessary in order to calculate the correct amount of estimated tax for the year. There is a separate line below in the worksheet to show estimated withholding tax.
If You Receive Social Security Benefits or are Self-Employed
There is a separate worksheet in Publication 505 to help you estimate your adjusted gross income if you expect to receive social security benefits, and another worksheet to estimate your earnings from self-employment, the self-employment tax, and your adjustment to income for one-half of your self-employment tax.